I wanted to post this to see if anybody gave me some ideas on what to do to overcome this challenge.
So I bought a house from a wholesaler that needed rehab last Feb, I went through the whole full rehab, the rehab was not easy at all, as I had the misfortune of dealing with two very bad contractors who blew my budget and took way too long to finish the project.
Anyway, I have with one of those 6 month hard money loans and it will be up in the next couple of month. I am completely out of time and now this thing is in the market but it is NOT moving. I have not had any showings and it is listed at the same price ARV that the appraiser gave me when I first acquired it.
I am utterly desperate for a solution, as it's been on the market for 2 weeks almost, and there is simply no interest. The realtor has held an Open House, we've dropped the price twice already, in the description we say that we are super motivated, so people know I am negotiable but still nothing! There is a house that sold nearby, NOT updated, for almost the same square footage that I am selling mine, and mine is fully updated. Theirs has 1 less bed and 1 less bath and those people were under contract in no time.
At this point, at the price that I am at, I am only making just a little bit, which is so depressing because the rehab was so incredible hard, and for buyers not to show any interest, I am in disbelief.
Anybody has gone through a similar situation? How did you get yourself out that mess?
Any ideas in general are very much appreciated.
Thanks for reading.
Ouch! Are you in a market that was already"hot" and desirable?
Perhaps you can market the home differently- Lease option or renter then refinance that hard money loan once someone is in it.
Just a few ideas
I have gone through difficult contractors but I have not gone through a flip that isn't selling.
My advice would be to stay calm and give things another few weeks. See if you can talk to your lender or find another lender to bridge things. Know it's not an easy situation but you are where you are. Be proud of yourself for taking a risk and taking action. It didn't turn out how you wanted but I bet you've learned a lot.
July fourth holiday might have put a bit of a crimp on your showings. I didn't get much activity the last two weekends. Also, have you offered an incentive to the buyer's agent? Offer them $500 or a $1,000 extra to sell your house.
But generally what this usually boils down to is price and an appraiser may not be the best person to base your price from, particularly if he used comps more than a few blocks away.
Something is missing from this equation. A rehabbed house not selling for at least what the non-rehabbed house with fewer beds and baths sold for? No offense, but you're leaving something very important out of this scenario.
The market didn't change that dramatically in 90 days so if you're not getting any showings, you better revisit the price. Keep in mind that the only person who cares whether you're making a lot of money, a little money or taking a hit...is you. You should have a broker open house with food and perhaps some prizes, but to win, each agent/broker MUST give you written feedback on why they believe the house isn't selling. It's really hard to offer advise without photos and details on market conditions.
Is the property staged?
Ok, thank you all for reading and your feedback.
The property is staged. I went ahead and offered the $1K offer bonus to buyer's agent today if they bring buyer before the end of this weekend & I accept a contract. Let's see if that helps. I think the missing point is that I reviewed again today and most houses seem to stay on the market for at least 45 days but this one that wasn't updated for some reason lucked out and they were able to sell fast at the the top of the market. Not sure how they pulled that off.
Bottom line I am desperate to get rid of this thing and it's causing me to drop the price because I am running out of time. I will look into refinancing but I don't think I can because I have my own business so I am not sure if banks will even help out.
Thanks again for reading. Hopefully I'll be able to get rid of this property this week.
You said a lot when you say the days on the market is 45 days.
Just a couple thoughts - how is your curb appeal?
What is your agent doing to market your property?
Daily online marketing?
Multiple GOOD pictures, virtual tour?
Open houseS - not just one, try open house during the week. Is there hype for the open house? Is your agent inviting other agents to the open house?
Keep us post and good luck
See if the HML will extend the deadline.
What were the results of the open house? Did anybody attend? Did you get any feedback?
Two weeks on the market is short, so maybe it's just a matter of time. But there could also be something wrong about the property - whether that Is location or size or your taste in the rehab - whatever might be wrong needs to be addressed to get a sale.
Agree with everyone else, especially Guy, something is missing here. Two weeks is a short time to be on the market and two price drops in two weeks is extreme. Post the address and let's have a look. Last time someone posted along these lines, the house showed as Pending on the MLS and they couldn't figure out why their house wasn't getting any showings! The realtor goofed on that one and it wasn't until they posted the address on here that someone noticed.
Give us a link to the listing and we may be able to help.
But in general, if average DOM is 45 days and you have had it listed for 14, you need to force yourself to relax a bit.
You might want to raise the commission for the buyers agents or offer a cash bonus to agent and 3% buyers closing cost.
Also, you say it is listed at the ARV you got from the appraiser. But you also say you have reduced the price twice. So is it that now, after the price reductions, you are listed where the appraiser said you should be? If so, you listed too high and should not be surprised by a lack of interest.
Who hired the appraiser? You or the person who sold it to you?
Can you please post the address or a Zillow link so that we can see the listing the same way that a prospective buyer would be seeing it if they were looking in your area?
Gonna have to give us the address if you really want help on this one.
First of all, the appraisal value in my opinion is worthless. Appraisers are a necessary evil that will adjust prices, in my opinion, to make the sale happen unless it is way far off.
Secondly, location, location, location. Your house compared to the other one may be in a less valuable neighborhood, even if they are only 800 ft apart.
3. 2 weeks is nothing. Be patient. You need to give it time.
4. If its still not selling then I would recommend dropping the price before offer bonus' to the other agent.
I agree with @Colin Smith .. I have seen appraisals so far off from one another on a particular house that I even doubted they went to the same house. I'm wondering if you have a competent real estate agent you're working with who would've provided you with truly accurate comps and market statistics (i.e days on market vs. list price median, original sales price vs. sold sales price etc.) or if you went by what the wholesaler was saying? Most wholesalers (not all) use some inflated inaccurate figures to make their deal look better than it actually is. I think a good wholesaler will have been a good flipper his/herself first so at least they have an experienced leg to stand on.... just my 2 cents...
If 45 days is the average DOM, then even if your house is really nice, it wouldnt be unusual at all to go to 30 days plus. Also the price an appraiser gives you only has a casual relationship to the properties market value.
We have a saying at our office, one that sellers do not like to hear. "Price cures all."
In this business you must have a plan B and C exit strategy. Don't know what your numbers are, you can get a 5 year hard money loan from Visio Financial out of Texas.
Can you turn this into a brrrr plan until it's sold?
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@Ind Kon it's the price. Period.
While two weeks, especially with a holiday is too short to panic, you should at least be getting some interest. Staging, offering a buyer agent bonus, open houses, robust marketing will help, but they are only the sorts of things that move the needle a bit. Any house will sell at the right price. Too low and you are leaving too much money on the table. Too high and it takes too long to sell.
And yes I've been there. I've decided to hold properties where I've gone over budget and couldn't get a good enough price. And I've sold losing lots of money. Every serious investor makes mistakes. I feel really bad that this may be the case on your first one, but you've gotten a valuable lesson which is worth a lot.
1. upload 3 to 5 craigslist ads per day, change the wording to suit the type of buyer you think would best fit into the neighborhood
2. have an open house each weekend on a Sunday for a couple of hours, make sure its well advertised
3. stage the house
4. make sure the landscaping and curb appeal is beautiful
5. make sure the utilities are on in the property and the air is on for retail homebuyers
6. network with people who work with retail buyers, if there is a buyers assistance class/event locally go there with plenty of flyers.
7. network with your local real estate investment groups, there are always agents around you work with real buyers
I have to respectfully disagree about the only problem being the price. Do you have pictures of the house? We have purchased flips where we barely touched the inside of a house but dramatically changed the curb appeal and made some quick, easy money. It's hard to sell a house if you can't get potential buyers through the front door. You say you have had no showings. It could definitely be price, but I would look closely at curb appeal. Post some pics and we will be more than happy to give our 2 cents! Does it stick out from the other houses in the neighborhood? Sticking out for all the right reasons is one thing.... sticking out for the wrong reasons is another!
We can all speculate all day what the issue is but unless we can see some pics or you provide the address everybody is just guessing. In this market, DFW, you should be getting multiple full price offers in the first few days of listing it.
Unless you have a weird property (i.e. border on a cemetery, impossible layout, no fence etc.) then your property is simply overpriced.
DFW today is STUPID HOT which means every decently priced property gets multiple offers within 2-3 days and some of them are over asking price.
Have your realtor pull a CMA report and see what's the right price point you should be at.
Don't take an appraiser value from 6 months ago as a gospel...
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